What are the qualities of good money material?


To be able to perform the functions of money well, the money material must possess the following qualities:

1. General Acceptability:

The material of which money is made should be acceptable to all without any hesitation. In this connection, gold and silver are considered as good money material bf cause they are readily acceptable to the general public. Apart from being used as money, these metals can also be put to other uses (e.g., making ornaments.)

2. Portability:

Money should be easily carried or transferred from one place to another. In other words, the money material must have large value in small bulk. On this ground, various animals cannot be used as money.

3. Durability:

Money material must last for a long time without losing its value. Ice and fruits cannot become good money because they lose their value with the passage of time. Ice melts and fruits perish.

4. Divisibility:

Money material must be easily sub-divided to allow for the purchase of smaller units of the commodities. Cows, for example, cannot function as good money because a cow cannot be divided without losing its value; a fraction of cow is quite different entity than a whole cow.

5. Homogeneity:

Money should be homogeneous. Its units should be identical; they should be of equal quality and physically indistinguishable. If money is not homogeneous, the individuals will not be certain of what they are receiving when they make transactions.

6. Cognisability:

Money should be easily recognized. If it is not easily recognisable, it would be difficult for the individuals to determine whether they are dealing with money or some inferior asset.

7. Stability:

The value of money should remain stable and should not change for a long period of time. If the value of money is not stable, it will not be able to function as a measure of value, as a store of value and as a standard of deferred payment.

8. Malleability:

The money material should be capable of being melted and put to different forms. Gold, silver, copper, etc., have this quality.


The precious metals, gold and silver by and large, possess the above mentioned qualities of good money material. It is because of this reason, that these metals have been used as money for a considerably long period of time. Now the notion of money has changed. The modern governments go through trial and error procedures before adopting a common medium of exchange. The main considerations for selecting a money material are general acceptability and cost of producing money. That commodity is chosen to serve as money which will be widely used by the people and which offers the least costly benefits of a common medium of exchange.

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